The asymmetric influence of environmental-related technological innovation on climate change mitigation: what role do FDI and renewable energy play?

Abstract

This study aims to provide a new perspective on environmental studies by examining the influence of environmental-related technological innovation, foreign direct investment, renewable energy consumption, and economic growth on the climate change index (CCI), a novel proxy for environmental quality indicators. From the econometric standpoint, this study employsthe "non-linear autoregressive distributed lag" model and spectral causality over the period of 1999-2018 for India. The results show that positive shocks to economic growth have detrimental long- and short-term effects on environmental quality, whereas negative shocks have no effect. While a positive shock has an insignificantimpact, a negative shock to environmental technology innovation has a long-term negative impact on environmental quality. This study provides evidence for the pollution halo hypothesis in India. Besides, a long-term negative shock to the usage of renewable energy fosters environmental degradation. Furthermore, in short-, medium-, and long-term frequency, spectral causality demonstrates unidirectional causation from CCI to environmental-related technological innovation. Bidirectional causation is demonstrated between the CCI and renewable energy consumption in the short and medium term. In addition, environmental-related technological innovation and foreign direct investment are demonstrating a bidirectional relationship in the short term. This study has advocated the Sustainable Development Goals (SDGs)-centricpolicy paradigm, which can assist the Indian government in achieving SDG-13 (mitigating climate change) and SDG-7 (clean energy consumption).